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GM Sees Modest Sales Growth in 2013 - Analyst Blog

General Motors Company
(
GM
) revealed at an industry conference in Detroit that it expects
modest growth in global auto sales in 2013 as improvements in
China and the U.S. will be offset by sluggish car sales in
Europe. The automaker predicted a 5% rise in industry sales in
the U.S. and international market each, while European market is
expected to shrink 4%.

The company foresees pricing pressures to exist, particularly in
China and Europe. However, it expects moderate market share gain
across the world driven by new vehicle launches will boost its
profit margins. GM plans to upgrade 70% of its global line-ups by
the end of this year and invest $8 billion annually in new
vehicle development.

In North America, GM aims to boost market share and increase
vehicle pricing. The company expects to enhance profit margins in
the region to 10% in the next three or four years from 8%
currently. Meanwhile, the company has targeted break-even results
in Europe by 2015. In China, GM intends to improve margins by
continuing investing in Cadillac and rolling out its OnStar
communications, in-car safety system.

In late 2012, GM revealed that it intends to manufacture 500,000
vehicles per annum by 2017 that will include some form of
electric technology as part of its long-term goal to become a
leader in the fuel-efficient vehicles market.

The vehicles would mainly include plug-in hybrids such as
Chevrolet Volt, apart from pure electric vehicles such as
Chevrolet Spark EV that will go on sale this year. The company
also plans to push its eAssist system technology in its new
vehicles. The eAssist system boosts fuel efficiency by 25% in
gasoline-powered vehicles.

Many automakers started focusing on electric powered vehicles as
President Barack Obama's administration set a goal of achieving 1
million battery-powered vehicles on the road by 2015.

In August 2012,
Ford Motor Co.
(
F
) announced its plan to invest $135 million to develop key
components, including advanced battery systems, for its
next-generation hybrid-electric vehicles. The automaker is
looking forward to double its battery-testing capabilities to 160
individual battery-test channels by 2013. It aims to boost
development of hybrid-electric vehicles by at least 25%.

Ford plans to launch five fuel-efficient hybrid-electric vehicles
this year including Focus Electric, C-MAX Hybrid, C-MAX Energi
plug-in hybrid, new Fusion Hybrid and Fusion Energi plug-in
hybrid. It also plans to triple production capacity of
electrified vehicles by 2013.

GM, a Zacks Rank #3 (Hold) stock, posted a 9.7% fall in earnings
to 93 cents per share (excluding special items) in the third
quarter of the year from $1.03 in the corresponding quarter a
year ago. However, earnings per share in the quarter far exceeded
the Zacks Consensus Estimate of 61 cents.

Revenues in the quarter grew 2.5% to $37.6 billion, surpassing
the Zacks Consensus Estimate of $36.3 billion. Worldwide sales
volume inched up 1.6% to 2.3 million units from 2.2 million units
a year ago. However, total market share declined to 11.6% from
12.1% in the third quarter of 2011.

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